Richard McClusky

Following a successful motion striking a punitive damages claim in a proposed securities class proceeding, the defendants sought partial indemnity costs of approximately $43,000.

The plaintiff argued that no costs should be awarded because the motion raised a novel point of law concerning the availability of punitive damages under Part XXIII.1 of the Securities Act.

The court accepted that the issue was legally novel and reasonably contested, noting that existing case law did not clearly resolve the question.

Exercising its discretion, the court held that fairness justified departing from the usual costs rule.

No order as to costs was made.

The plaintiffs brought a proposed class action against the directors, officers, and advisors of a Delaware-incorporated company for alleged misrepresentations and failures to disclose under Part XXIII.1 of the Securities Act.

The defendants brought motions to strike the claim for punitive damages, strike the claim against a former director for failing to disclose a reasonable cause of action, and stay the action against the foreign financial advisors on jurisdictional grounds.

The court granted all motions, striking the punitive damages claim as inconsistent with the statutory scheme, striking the claim against the former director without leave to amend, and permanently staying the action against the foreign advisors as the court lacked jurisdiction simpliciter.